The Sars restructure triggered paralysis in decision making

The focus should be on re-engineering Sars to make it great again. Picture: Moneyweb

The new structure has broken the organisation.

The Nugent Commission of Inquiry into the South African Revenue Service (Sars) continued its hearings last week. Among those questioned was Nishana Gosai, who left Sars in 2016.

Gosai was the manager of the transfer pricing (TP) unit at the Large Business Centre (LBC). She reported to the LBC executive of assurance, who reported to the CEO of the LBC (a position that was removed in the restructuring).

The TP unit had developed a sophisticated risk assessment process, identifying cases that would result in “bang for buck”. Study tours were made to various countries, with the objective of leveraging from the best practices.

TP had been a strategic objective of Sars from 2010, and was a large revenue generator. However, TP audits took a long time and it was important to build a pipeline of TP audits. The audit methodology developed by the TP team ensured skills transfer, quality and on the job learning.

The LBC provided the optimum environment for the TP team to perform at its peak. The TP team could draw on auditors from other disciplines when needed, as well as the expertise of other tax specialists at the LBC. The TP unit also worked closely with the technical specialists and lawyers who were part of Specialist Support at the LBC. Further, the large multinational entities, which were the TP unit’s audit target, were at the LBC. The TP risk profiling unit (which selected cases for audit) and the taxpayer relationship managers were based at the LBC. The restructure resulted in the fragmentation of the LBC, and the physical movement of various staff to other offices.

Gosai said that when then Sars commissioner Tom Moyane (now suspended) announced the review of the Sars operating model on January 23, 2015, and said that the framework for the operating model would be disclosed on March 21 that year, her first thought was that this short timeline was “a bit ambitious”. The ‘new’ operating model project team did not include anyone from the LBC, and the TP unit was not consulted on the design of the new operating model.

The Sars restructure triggered paralysis in decision making. No one wanted to make a decision. Gosai was of the opinion that the change in key performance measurements, as well as the change in the operating model, would negatively impact the TP revenue yield.

In answer to the question posed whether the new operating model was an improvement, she said no, “not by a long shot”. She proclaimed that what has happened to Sars should never be allowed to happen again. The new structure has broken the people as well as the organisation. Technicians with the higher purpose in mind instead got caught up in a political narrative that they should never have been involved in.

Gosai opined that the new commissioner should be an apolitical appointment, and that the appointment should follow a parliamentary process. She said the commissioner is there to serve the country, not a political party, and should be directly accountable to parliament. In addition, a new and untainted executive committee should be appointed to take the organisation forward. The focus should be on re-engineering Sars to make it great again.